The impact of preservation technology investments on lot-sizing and shipment strategies in a three-echelon food supply chain involving growing and deteriorating items

Abstract

Food production systems are complex industrial operations that often involve multiple parties. This study proposes inventory management strategies for a multi-echelon perishable food supply chain with growing and deteriorating items. The upstream end of the proposed food supply chain is the farming echelon where newborn growing items are reared to maturity. Following this, the items are sent to the processing echelon for processing, a term that collectively describes activities such as slaughtering, cutting and packaging. The aim of the processing echelon is to transform live growing items into processed food products that are suitable for human consumption. The downstream end of the supply chain is the retail echelon where consumer demand for processed food products is met. Once the items are processed, they are subject to deterioration at both the processing and retail echelons. In light of this, an integrated inventory model aimed at optimising the performance of the entire food supply chain is formulated. The impact of investing in preservation technologies is also investigated due to the perishable nature of food products. To do this, a secondary model that incorporates an investment in preservation technologies is formulated. The model, representing a simplified industrial food production system, is aimed at jointly optimising the lot-size, number of shipments, growing cycle duration, processing cycle duration and the preservation technology investment amount. The results from the numerical example demonstrate that the preservation technology investment is worthwhile because it results in reduced inventory management costs across the supply chain.